From the Ministry of Obvious

Okay, I’m a huge fan of Research Recap, so don’t take this as “ragging” on them, but I was reading my feeds and came across this gem of a headline:

Synthetic CDO Issuance Down Sharply in First Quarter

Wow! Really? Apparently CreditSights, whom I have heard good things about, put out a report saying this. The money quote? Here it is…

The Cash flow CDOs that are being launched increasingly appear to be designed to help banks clean up their balance sheets rather than attempts to arbitrage the agency ratings.

And then there was this other gem in the post, quoting the report…

“Any widening, it was claimed, would rapidly be exploited by a wave of CDO issuance. The most important driver of this stabilisation was synthetic CDOs – specifically the idea that bespoke single-tranche deals could be placed with investors without the need to fill the entire capital structure and this protection selling would push spreads lower.”“Such arguments have been demolished by the events in the past 12 months with both synthetic and cash flow CDO issuance falling like a rock owing to a slew of economic, ratings, and funding concerns.”

So why is CreditSights (CreditHindSights, in this instance) releasing such a report, detailing what everyone with a minimal attention span and the ability to read a newspaper would be able to figure out for themselves? Oh, right …

The full report is available for purchase.

(link omitted)

I don’t think a firm needs to sell a report telling people interested in reading finance research that people aren’t buying CDOs like they used to, anymore.

Maybe their next report will analyze Bear Stearns most recent 10-K and detail some warning signs they see as troubling…

Explore posts in the same categories: Assets, Finance, Financial Institutions, Fixed Income, Information, Miscellany, Structure

Tags: , , , , , , , , ,

You can comment below, or link to this permanent URL from your own site.

One Comment on “From the Ministry of Obvious”

  1. […] and fewer buyers of the lowest unrated pieces. Hmmmm…. I’m guessing there will be less securitization volume. However, I do think there will be securitizations going on. The financial technology is […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: